Arrange the sequence of events relating to establishment of equilibrium in the economy.

(A) This will cause unintended decumulation of inventories

(B) This process continues till ex-ante aggregate demand becomes equal to ex-ante aggregate supply

(C) The producers will respond by increasing output

(D) If ex-ante demand for final goods by firms and households is greater than the output the producers plan to produce in a given year

(E) When output increases, both employment and income rise

Choose the correct answer from the options given below :

Question

Accepted Answer

(D), (A), (C), (E), (B)

Answer

(A), (C), (B), (E), (D)

Answer

(A), (E), (C), (B), (D)

Answer

(D), (C), (B), (E), (A)

List-I	List-II
(A). Marginal propensity to consume (MPC)	(I). C/ Y
(B). Consumption function	(II). C + I
(C). Average propensity to consume (APC)	(III). ΔC/ ΔY
(D). Aggregate Demand	(IV). C = c + cY

List-I	List-II
(A) Marginal propensity to consume	(I) Change in savings per unit change in income.
(B) Marginal propensity to save	(II) Savings per unit of income.
(C) Average propensity to consume	(III) Change in consumption per unit change in income.
(D) Average propensity to save	(IV) Consumption per unit of income.

Solution